Union Trust Building in bankruptcy court, its future uncertain
It's mired in turmoil, nearly three quarters empty, and in the need of repair.
But while the Union Trust Building on Grant Street may be down on its luck right now, local real estate brokers say better days could be ahead -- if the architectural gem built by industrialist Henry Clay Frick ever gets to the market.
For much of the last year, the 11-story Flemish Gothic landmark, built as a shopping arcade, has been entangled in litigation, bankruptcy and a battle between the two men, Michael Kamen and Gerson Fox, who bought the building in 2008 under the name 501 Grant Street Partners.
And the jostling isn't over yet. The latest twist is that a sheriff sale scheduled for Jan. 7 is on hold after several creditors of 501 Grant Street forced it into bankruptcy in California last month. One of the creditors is Gertrude Fox, the wife of Mr. Fox.
The latest bankruptcy filing came after Judith K. Fitzgerald, a U.S. bankruptcy judge in Pittsburgh, dismissed a petition filed last August by 501 Grant Street for Chapter 11 reorganization. The dismissal cleared the way for the building to be scheduled for sheriff sale on Jan. 7.
But with the new involuntary filing in California, Sgt. Richard Fersch of the Allegheny County sheriff's office said Monday that he has no choice but to halt the upcoming sheriff sale. Such bankruptcy filings usually trigger an automatic stay of pending foreclosures.
"We will stop the sale pending the receipt of information from the bankruptcy court instructing us what to do," he said.
SA Challenger, the lender seeking to foreclose, has filed a motion in the California bankruptcy court to lift the stay, arguing among other things that the property is continuing to decline and that the debtors have no access to cash to manage it. A hearing is set for Dec. 19.
In its motion, the lender cast the once glorious building as nearly threadbare.
It said that the structure is 60 percent to 70 percent vacant and beset by a number of maintenance problems, from sidewalk damage that seems to be allowing water to seep into the basement to issues with some of the elevators. Its lone major tenant is Siemens, which has been in litigation with the owners.
The appraiser hired by the lender estimated the value of the building at $22.6 million -- far less than the $41.4 million the lender is seeking in the foreclosure. Mr. Kamen and Mr. Fox paid $24.1 million for the property in 2008.
Despite the tumult surrounding the building and the potential investment needed to restore it, some local real estate brokers say there is no shortage of interest from potential buyers should the Downtown property ever hit the market.
Jeremy Kronman, a CBRE executive vice president who was a former leasing agent for the building, receives calls weekly from local, regional or institutional investors inquiring about the real estate. CBRE is serving as the receiver for the property, although Mr. Kronman is not involved in that task.
"I would anticipate that given the strength of the Pittsburgh office market, there would be a very strong interest from multiple parties on the property."
In addition, Scott Schorr, a Pittsburgher and a graduate student at the University of St. Andrews in Scotland, said in an email he is putting together a campaign to raise $50 million to buy the building through a public-private partnership.
His goal is to recruit as the major tenant the Transatlantic Economic Council, an organization created in 2007 by the United States and the Economic Union to foster economic integration and cooperation. Mr. Schorr has spoken to the Pittsburgh History & Landmarks Foundation about his idea.
Designed by Frederick J. Osterling, the building originally was home to a four-story shopping arcade with 240 shops on the lower levels and 700 offices above. The architecture style dated to 1500 and the structure was patterned after the 57-story Woolworth Building in New York City completed in 1913.
Stained glass windows sit above the Union Trust Building's four main entrances. Inside are white terra-cotta walls and bronze fixtures as well as the building's defining feature: a center rotunda, topped by a stained glass dome.
Despite the bankruptcies, the foreclosures and the nearly empty retail and office space, Mr. Kronman sees better days ahead for the grand old building -- at some point.
"It's going to be a real gem again," he said.
First Published December 4, 2012 12:00 am